Expert Opinion

John Kenel – Property Market Differences – New Zealand vs Australia

None of the factors listed below affecting the Australian market apply to NZ and despite the fact that the NZ government has introduced uncertainty into the property market with their deluge of ‘possible’ changes to regulations, listings are low and sales in relative terms are strong.

Australia is suffering a credit crunch. That is not happening here in NZ.

There is an over-supply of property in Australia. We have an under-supply.

50% of recent consents issued in Australia have been for apartments. In NZ the proportion is about 11%. Apartment markets are far more volatile than standalone dwelling markets.

States in Australia have levied punitive stamp duties and annual land taxes for non-residents.

At the peak, 45% of home lending in Australia was to investors. Our peak was 35%. In Australia recently 31% of lending was still for investment. We are at 18%.

The household debt to income ratio is higher in Australia than NZ at 190% versus our 164%. Their debt servicing ratio (interest payments vs. income) is 9.1% vs. our 7.8%.

Chinese buyers appear to have been far more present in Australia than here and their withdrawal has been felt more there than here.

It’s still a good time to purchase a rental property in NZ.

We doubt that a capital gains tax will be introduced as most NZers don’t want one. If anything, I think the brightline test will be extended from 5 to 10 years. This is already a form of capital gains tax and easy to administer.

Rental property is in short supply, rents are rising quickly and property investment is still a proven method of creating wealth and inflation protected cash flow. The sooner you start, the better.

John Kenel
CEO Assured Property Investments

Credits: Differences between NZ vs Australian market research courtesy of Tony Alexander, BNZ.